Paradox: The Fatal Flaw In Raising The Retirement Age

Speaker of the House John Boehner of Ohio applauds President Barack Obama during hiss address to a joint session Congress on Capitol Hill in Washington, Sept. 8, 2011. (AP Photo/Kevin Lamarque, POOL)
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The push to raise the federal retirement age has waxed and waned in recent years but comprises a dedicated cadre of powerful politicians and wealthy advocates. It is a recurring feature of debates about how to reduce the long-term debt and contain safety-net spending on retiree programs like Social Security and Medicare.

The most commonly stated justification is that average life spans have gone up since these programs were put in place. It may seem like a compelling reason: in 1935, when Social Security was enacted, the average U.S. life expectancy at birth was 62. By 2012, it shot up to 80.

“When you look at life expectancy in America today and you look at the Social Security system, we’re all living far longer than anyone had ever anticipated and the result of these big demographic changes is having a disastrous effect on the Social Security program. And so raising the retirement age or considering it is something that ought to be on the table,” Speaker John Boehner (R-OH) told CNN after he assumed the gavel. In the summer of 2011, Boehner and President Barack Obama nearly struck a deal to raise the Medicare age to 67.

But a closer look at data sheds unprecedented light on this phenomenon and reveals a fatal flaw in the logic. It turns out that life expectancy has risen for the well-off but has stagnated or even fallen in recent decades for those toward the bottom of the income distribution — who happen to rely on the retirement safety net the most.

The New York Times mapped out the startling correlation between income and life expectancy across counties, based on data from the Institute for Health Metrics and Evaluation and the Census. For example, in Fairfax County, one of the richest in the country, the life expectancy is 82 years for men and 85 for women, but in McDowell Country, one of the country’s poorest, it’s 64 for men and 73 for women. (Both charts below come via the Times.)

Since 1990, the average life expectancy in Fairfax County has risen substantially; in McDowell it has since fallen slightly for men and women.

That’s the paradox: raising the eligibility age for Social Security or Medicare stands to harm those who need the programs most — and, crucially, have not been fortunate to enjoy longer lives. And that’s just the tip of the iceberg: in the last decade, median family incomes have stagnated and families are being crushed by the weight of rising costs of health care and education, among other things. The rich-poor gap has soared to unprecedented levels.

“It’s kind of frustrating, however, that this is apparently coming as news not just to many readers but to many policymakers and pundits,” wrote Nobel Prize-winning economist and New York Times columnist Paul Krugman, a staunch opponent of raising the retirement age. “[W]hen people call for raising the Social Security and Medicare ages, they’re basically saying that janitors must keep working because corporate lawyers are living longer. Yet it never seems to sink in.”

The findings do, however, provide some support for means-testing programs like Social Security and Medicare to reduce benefits for those at the upper end of the income spectrum. Proposals of that sort have tended to enjoy more bipartisan support in recent years.

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